Time for EURAFTA? A European Union-American Free Trade Agreement

Angie Merkel + Joe BidenMiserable as past few years have been for the sluggish global economy, there is a bright side. Hard times have forced the political leaders to cast about for ideas to boost growth, every now and then they come up with a good one. Case in point: the push for a free-trade agreement between the United States and the European Union. On Friday, national leaders of E.U.’s 27 member states expressed “support for a comprehensive trade agreement” with the United States, citing its potential to create jobs in a continent still struggling with high unemployment and debt. To be sure, the transatlantic trade is already massive; according to the Commerce Department, the United States exported $329 billion worth of goods to Europe in 2012, while importing $454 billion. Average tariff on this huge flow of goods, larger than between United States and Canada, Mexico, China, Japan, is an already low 3%. Still, zeroing out tariffs would boost US- European economic output nearly $180 billion within 5 years, evenly divided between the two sides, according to a 2010 U.S. Chamber of Commerce report. Gains would be even larger if the United States and Europe can agree to remove the non-tariff regulatory barriers to trade, such as Europe’s aversion to U.S. agricultural products made from genetically modified organisms. Indeed, once talks begin in earnest, agriculture is likely to be worst sticking point. Industrial rules and regulations are relatively easier to harmonize. U.S. unions and environmentalists, which have objected to past trade agreements with Mexico and Colombia, would seem to have fewer reasons to oppose deal with green, high-wage Europe. Apart from economic benefits, a free trade would strengthen U.S.-European strategic ties. For all their current woes, and despite the rise of China, the United States and Europe still produce more than half of global economic output. It is in their mutual interest to unify standards and regulations so as to jointly shape the flow of trade. For its part, Obama administration has fretted that negotiations could bog down if Europe fails to back its pro-trade words with action, as it is sometimes wont to do. Friday’s E.U. statement comes on top of unequivocal personal public support for free trade by Chancellor Merkel of Germany and Prime Minister David Cameron of Britain, and now Europe is wondering when President Obama will send an equally strong signal, so that talks can commence in earnest. Vice President Biden recently declared in Munich the “almost boundless” benefits of free trade are “within our reach.” But many across the Atlantic expect Mr. Obama to put his own prestige on the line for free trade, perhaps by declaring it a major second-term goal in his State of the Union address on Tuesday. We hope so, too. (source: Editorial Board – The Washington Post – 11/02/2013) 


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5 Responses to Time for EURAFTA? A European Union-American Free Trade Agreement

  1. President Obama and European Union leaders last week kick-started an ambitious effort to negotiate a free-trade agreement that would cover nearly half of the world’s economy. A balanced deal that reduces trade barriers and offers sensible regulatory standards could give a significant boost to the global economy and renew America’s most important alliance. The trade between the United States and Europe accounts for about one-third of all international trade in goods and services, or about $2.7 billion a day. Lowering barriers would help create new jobs by making it easier for businesses and farmers to produce goods for both markets. European leaders struggling to revive their economies have enthusiastically endorsed the effort. Unlike other trade deals between the United States and countries like South Korea and Colombia, the trans-Atlantic deal would not primarily be about reducing tariffs, which average only about 4 percent between America and the 27-nation union. Instead, it would need to focus on the regulatory differences that limit trade between the continents — and fashion mutually acceptable regulations on matters from car emissions to food safety. And that’s where the biggest challenges and frictions lie. Europe, for instance, has taken a strong stand against genetically modified crops and has restricted American food exports to the continent. And the Europeans have long complained that the buy-American policies of some state governments have shut their companies out of important markets. Some of these strains were showing shortly after Mr. Obama backed the trade deal in his State of the Union speech. The president of the European Commission, José Manuel Barroso, said that restrictions on genetically modified crops would not be part of the negotiations, though President Obama’s trade representative, Ron Kirk, said all issues, including thorny agricultural matters, would be on the table. The Obama administration believes that a deal on agriculture could be achieved without changing European or American laws if, for instance, the two sides agree to accept each other’s food-safety regulations. In addition to this initiative, the United States is working on a Pacific trade deal with 10 countries. Many nations have increasingly focused on bilateral and regional agreements because little progress has been made in the global trade negotiations known as the Doha Round. American and European officials say they want to reach a pact within 18 months. If they make substantial progress on issues like food safety, a deal could give a push to the Doha Round by providing a workable template. (source: Editorial – NYTimes – 21/02/2013)

  2. John Kerry has been a politician for some 31 years, but he has had a weakness for nostalgia for much longer. And his fondness for overwrought rhetoric has been on full display in recent days, ahead of his Monday visit to Berlin, the second destination after London of his first overseas trip as US secretary of state. In particular, Kerry has spoken of recent days of the time he spent in Berlin as a 12-year-old, when his father was stationed in postwar Germany as a diplomat — and recalled fondly biking down the city’s Kurfürstendamm boulevard or to the Brandenburg Gate. It occasionally sounds as if Kerry would like to return to the Berlin of his youth, a time when the people of the world had one eye on the city and Germany was becoming firmly established in its roll as one of America’s most important Cold War allies. Those close to Kerry say he is also measuring his own administration against historical role models from that era — men like Henry Kissinger and George Marshall, the father of the Marshall Plan. Like them, his advisors say, Kerry wants to create visionary foreign policy, also in terms of Washington’s relationship with Europe. Such comments have led trans-Atlanticists, too, to succumb to nostalgia. They see Kerry’s decision to visit Europe first — in contrast to his predecessor Hillary Clinton — as a sign that Europe may not have been completely ousted by Asia at the top of Washington’s priority list. Yet such hopes aren’t just nostalgic — they’re pure fantasy. The only place where the divided Berlin of Kerry’s youth still lives on is in the history books. And that’s actually good news. The bad news is that the United States no longer has an eye on Berlin and, as nostalgic as he may be, there is little a man like Kerry can do about it.


  3. After all, Kerry’s boss, President Barack Obama, is perhaps the first genuine “non-European” in the White House. Unburdened by memories of the Cold War, Obama used Berlin in 2008 as an election stage. He hasn’t made it back to the German capital since. And during his re-election campaign last year, the president didn’t shy away from scolding Europe. Obama’s support for a planned free-trade agreement between Washington and the European Union is so half-hearted that he only added a sentence about it to his recent State of the Union address at the very last minute — and even then, it only came after statements about the implementation of a trans-Pacific trade agreement. Above all, though, Obama is the ultimate pragmatist when it comes to diplomacy. Vali Nasr, the influential Washington politics professor, recently came to the damning conclusion in a new book that Obama’s foreign policy isn’t based on strategic considerations, but solely on public opinion in the United States. The desire of the American people is clear. They would rather rebuild their country’s economy than focus on the rest of the world. Right now America is looking inside rather than outside, and moving forward it wants to act in the background rather than march at the front, as evidenced by its positions on Mali and Syria. In Washington these days, the usefulness of each diplomatic transaction trumps past priorities.


  4. Kerry will be unable to do anything to change that. For one, America’s political system grants the secretary of state very little influence. Indeed, there are more people in the US military’s marching bands than are employed in the State Department. The office holder can only wield power if he or she has the president’s ear. Ultimately, though, it is a small circle of confidants who influence Obama’s foreign policy, and not even Clinton, a political superstar, was able to crack it. “It is incredible how little support she got from the White House,” Admiral Mike Mullen, the former chairman of the Joint Chiefs of Staff, recently told the New York Times. “They want to control everything.” Besides, Kerry wasn’t even Obama’s first choice for the post. US Ambassador to the United Nations Susan Rice was initially supposed to be secretary of state, but that fell through after the scandal surrounding the US diplomats killed in Libya made her untenable for the position. Secondly, from Obama’s perspective, there is no alternative to America’s new foreign-policy restraint. The United States no longer wants to be the “irreplaceable nation” that Madeleine Albright once touted. And even if the country wanted that role again, it is unlikely that it would suddenly increase its focus and pay more attention to Europe, as former NATO commander Wesley Clark recently reminded German listeners during a speech. When the Americans actually do look to Europe, it will only be when working together actually pays dividends, as with the planned free-trade agreement. It is fitting of the current state of the US that the most divisive trans-Atlantic debates during Obama’s second term could surround poultry processing or medicine standards rather than the future of the West. Indeed, the role of America’s top diplomat today is more that of a trade commissioner than a global strategist à la Kissinger or Marshall. Someone now just has to explain that to Kerry.


  5. Consumer watchdogs, Internet activists and European farmers are gearing up to fight the planned trade agreement between Europe and the United States. Many in Europe are worried that politicians will make backroom deals at the expense of consumers (…..)



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